Editorial: It's too early for talk of property tax hike

We hope Memphis Mayor A C Wharton is not giving up on the effort to meet the city’s pressing financial obligations without increasing property taxes.

It is way too early for that type of talk until the mayor, administration officials and members of the Memphis City Council exhaust all other ideas to balance the fiscal 2014-2015 budget, which begins July 1.

Wharton said this week that given the right circumstances, he’ll support a property tax increase. He told The Commercial Appeal’s City Hall reporter, Daniel Connolly: “Let me make this very clear: If it comes down to a point in which to satisfy the pension obligations as mandated by the state, if there’s a shortfall and if you have to choose between cutting public safety and raising taxes, I will raise taxes.”

Actually, it won’t be the mayor who raises taxes. He can only recommend. Approving the budget and a tax rate to fund it is the responsibility of the City Council. And after last year’s property tax hike, there is no appetite on the council for another one. Ditto for taxpayers.

The city’s budget situation is stressed. The state comptroller is pressing the city to get its pension indebtedness under control. The city estimates the gap is $682 million and likely will be more than $700 million by the time the new fiscal year begins. An actuary hired by the city firefighters union estimates the gap is only $301 million. Either way, the comptroller said the indebtedness gap has to be closed.

Legislation is moving through the General Assembly that would require cities and counties to make minimum payments to their pension systems to make sure they are adequately funded. If the legislation is approved, it could upset Wharton’s proposal, which requires council approval, to close the pension gap, forcing the city to pump more money into the system than Wharton is proposing.

The city’s fiscal adversity goes far beyond adequately funding pensions. Its revenue streams are not robust enough to help the city meet all its funding obligations to provide basic services, adequately provide for public safety and fund the big projects that keep a city moving forward.

Cuts and efficiencies must be found before a property tax hike is proposed. Since the ultimate responsibility for funding city government falls on the council, members will have to resist the political, labor and constituent pressures that come with any discussions about funding cuts.